As you may have heard, the United Kingdom is about to introduce a fresh new form of taxation to the country. This has been in the process of development for many years, and now looks set to be rolled out before the turn of the decade. This is known as Making Tax Digital (MTD), and you may have heard of it. While MTD has been a fairly extensive topic of discussion within government, it’s not something that the average individual in the UK will know a great deal about.
One of the main reasons why MTD is coming in is purely to help save time. At the moment, the tax system is very confusing. It often leads to many problems with the system, with businesses either forgetting to file entirely or are making too many mistakes. The government, then, aims to bring in a more modern system that should cut down on tax issues as well as clamp down on tax fraud.
If you are serious about keeping up-to-date as a business about tax laws, then you will have to get used to Making Tax Digital. Despite all the controversy since it was announced, and the constant threat of it being put back from the rollout, Making Tax Digital is here to stay. This service is going to become a very important part of the wider tax industry and will play a key role in changing how we manage our books.
Why do I need to worry about Making Tax Digital?
This is not going to be just for some businesses – it is going to be for all businesses across the United Kingdom. One of the biggest issues that you might have is that you might not be sure if you are going to fall under the MTD regulation. For now, you might not: at present, MTD is only going to be aimed at businesses beyond the VAT threshold.
If you need to pay VAT as a business, though, you will need to be ready to make the most of Making Tax Digital immediately. Even if you are a sole trader or your business is not within the VAT threshold, changes will come in the near future that you will need to pay attention to.
One issue that you might have with MTD is that it’s not clear when changes will come for all. while this is still being decided, it’s important that you get used to the idea of MTD. Since taxation software will now need to use an HMRC-approved software to upload and approve all of your figures, it’s important that you start looking at MTD-compliant software.
Already, purpose-built software has arrived on the scene that will allow companies to get involved with getting ready for MTD for VAT. Even if you are not yet likely to be a business under MTD for VAT just yet, getting used to the new taxation system – and understanding why it is being implemented – can only benefit you.